Passionate about IP! Since June 2003 the IPKat weblog has covered copyright, patent, trade mark, info-tech and privacy/confidentiality issues from a mainly UK and European perspective. The team is David Brophy, Birgit Clark, Merpel, Jeremy Phillips, Eleonora Rosati, Darren Smyth, Annsley Merelle Ward and Neil J. Wilkof. You're welcome to read, post comments and participate in our community. You can email the Kats here

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Wednesday, 26 February 2014

A case of two halves. Hearst Holdings Inc & Another v A.V.E.L.A. Inc & Others[2014] EWHC 439 (Ch) is a decision handed down yesterday by Mr Justice Birss, sitting in the Chancery Division of the High Court, England and Wales, this court also being a Community Trade Mark Court for these purposes. What's the story?

All the figurativemarks were for thedepiction above

Hearst maintained that they were the successors of the originator of the cartoon character Betty Boop, first shown in 1930s America, and that they were the only legitimate source of Betty Boop merchandise in the UK. AVELA said that it too was a legitimate source of Betty Boop "imagery" in the UK (TPTL being AVELA's UK licensing agent, with Poeticgem and J Fox being AVELA's UK licensees and U Wear both distributing AVELA-licensed goods to retailers and selling them directly to the public online). Hearst alleged that AVELA and the other businesses were infringing its nine Community and UK word and figurative trade marks, passing themselves off and infringing copyright. AVELA and the rest denied infringement and said Hearst's registrations were invalid. The copyright infringement action won't be heard till January 2015, after the defendants were allowed to make huge amendments to their defence; the counterclaim for invalidity based on bad faith will also be heard then since it's tied in with the copyright arguments. There was also some previous litigation between the same parties: AVELA was successful in a corresponding lawsuit in the US, but had failed to oppose the grant of one of Hearst's Community trade marks.

Meanwhile, what about the trade mark and passing-off claims?

* Hearst relied on double-identity infringement, likelihood of confusion and taking of unfair advantage of their marks without due cause. Likelihood of confusion was also the basis of the passing-off action.

* Hearst maintained that any unauthorised product that bore an image recognisable as Betty Boop would infringe the device marks regardless of the pose of the character and that its BETTY BOOP word marks were infringed regardless of whether the words BETTY BOOP or BOOP (or a slogan like "Boop oop a doop") appeared on the defendants' products. Apart from the usual making and selling, Hearst argued that, by granting licences, AVELA infringed or was liable for the infringements of others as a joint tortfeasor, with TPTL being liable on a similar basis as AVELA's licensing agent.

*Two cases of passing off were advanced, being misrepresentations (i) that the Betty Boop merchandise sold under licence by AVELA was authorised by Hearst or was official Betty Boop merchandise (this deception being practised on both the trade and the public) and (ii) is a deception practised on AVELA's licensees, that they had been granted a licence in respect of Betty Boop by Hearst or by a party authorised by Hearst, as the official source of Betty Boop merchandise.

* AVELA said it did nothing wrong: it had gone to the trouble of reconditioning old movie posters with Betty Boop in them, using imagery derived from those old posters -- these being a source from which it or its licensees could reproduce images of Betty Boop which did not derive directly or indirectly from works in which Hearst owned copyright; these images were held in AVELA's "RADIO DAYS" library, RADIO DAYS being one of the company's other brands. This, they said, was a form of "copyright laundry" and there was nothing wrong with it from a copyright point of view if it worked. While agreeing that they offered licences, AVELA denied trade mark infringement on the basis that neither they nor their customers used Betty Boop as a trade mark at all since the Betty Boop imagery appearing on their goods was purely decorative, made no representation about trade origin and so could not infringe (they denied passing off on the same basis).

* AVELA said it sought to avoid using the words "BETTY BOOP", making it a condition of its licences that licensees did not use those words: "BOOP" or "BETTY" could be used alone, as could a slogan like "Boop oop a doop" -- but not "BETTY BOOP" since this was a trade mark.

* apart from the challenge to the validity of Hearst's marks based on bad faith, AVELA also challenged them as being devoid of distinctive character because they constituted the name or image of the very well known BETTY BOOP character, and that they consisted exclusively of indications of characteristics of the goods for which they were registered.

Birss J held for Hearst, finding that their Community and UK trade marks had been infringed in the UK and that there had been passing off. Among the many things that may be gleaned from the judgment of nearly 200 paragraphs (and remember, the copyright infringement and invalidity-via-bad-faith counterclaims are still to come), this Kat notes the following:

* it could not be argued that the use of a picture of Betty Boop on the products is within section 11(2)(b) of the Trade Marks Act 1994 or Article 12(b) of theCommunity Trade Mark Regulation. The pictures of Betty Boop were not being used as descriptive indications, particularly so since they appeared on swing tags which used the words "officially licensed" or similar. Such use was an indication that the goods were official Betty Boop merchandise.

* it would have been different had someone been selling what could fairly be called 1930s film memorabilia, with no real reference to the Betty Boop character as she has been built up by Hearst. But that was not the case here.

* no defence of honest commercial practices had been made out. AVELA knew of the existence of Hearst's marks, even seeking without success to oppose the registration of one of them. The requirement that licensees include a reference to "Official Licensee" enhances the likelihood of confusion; AVELA knew that Hearst would be likely to object and knew of their reputation but still intended to take advantage of it, in direct competition and even in the face of promptly-expressed objections.

* AVELA was entitled to rely on the fact that it won the US litigation, but this was scaarcely a strong point since the US litigation was not concerned with either party's rights in Europe.

* on the evidence the court was not satisfied that AVELA's President, Mr Valencia, had any basis for a bona fide belief that he owned copyright in all the licensed images.

* the restored movie posters were a "fig leaf" since many of the images featuring Betty Boop in the RADIO DAYS library had no obvious connection to the movie posters at all. For example, one of the images in the RADIO DAYS library was a cross-branding example, mixing Betty Boop with a poster for the 1950s B movie "Attack of the 50ft Woman" to make a picture called "Attack of the 50ft Boop" with Betty Boop's head transposed onto the head of the eponymous 50ft woman. Said the judge:

I am not in a position to make a positive finding about the origin of that or any other AVELA image. What I can say is that, insofar as derivation from restored movie posters is a part of the defendants' case on honest commercial practices, it is has not been established.

* Birss J did not see see how a conclusion of infringement engaged the right to free speech protected by Article 10 of the European Convention on Human Rights[is the same Birss J who said, earlier this month, how much looked forward to having a human rights defence raised in a copyright infringement action? Well, this is a sort-of-copyright case, isn't it, says Merpel who adds: "be careful what you wish for!"]. The "speech" by the defendants was purely in a commercial context and involves the presentation of words and images on goods in order to sell them. He added:

"If the conclusion I have reached is otherwise in accordance with the law of passing off or registered trade marks then I fail to see how it could be said to be a disproportionate restriction on freedom of expression".

* citing the ruling of the Court of Justice of the European Union (CJEU) ruling in Case C-408/01 Adidas-Salomon v Fitnessworld where the CJEU considered the use of a sign as embellishment, Birss J reminded AVELA and colleagues that just because the average consumer views the use as decorative does not necessarily avoid infringement: such usage only avoids infringement if it is purely decorative or purely an embellishment.
While he accepted that the average consumer (the general public) would see the use of the picture of Betty Boop on AVELA-licensed t-shirts as decorative, he rejected the argument that it was purely decorative: "It is not purely decorative, it also conveys a message concerned with the origin of the goods. Thus given that the picture is instantly recognisable as Betty Boop, I find the average consumer would establish a link". He added, at [176]:

" ... Even if I am wrong and an average consumer would not regard the picture of Betty Boop on the cow girl t-shirt as conveying any origin information at all, I am sure that the picture will convey associations and ideas to the average consumer which have been put into that consumer's mind by the claimants. That arises because of what it is that the sign Betty Boop signifies. The words or image of Betty Boop have no intrinsic meaning on their own, the associations which they generate only exist in a system of signs which signify other ideas. The ideas associated with the character of Betty Boop in the minds of the average consumer today are ideas caused by the claimants' extensive efforts over the years. I have rejected the idea that all an average consumer today would see, when looking at the t-shirt, would be a 1930s cartoon character. They will see a character with modern currency. This association certainly takes advantage of the claimants' investment in Betty Boop because many consumers will be moved to buy the t-shirt as a result of the favourable associations conjured up in their mind by Betty Boop, which associations are the creation of the claimants' extensive work. I do not have to decide if this is sufficient to establish infringement for the purposes of s10(3)/Art 9(1)(c) or whether such a finding would be an unwarranted extension of trade marks beyond their role as designators of origin".

This decision is notable for the careful manner in which the court has picked its way through the facts and has so carefully weighted their significance, bringing out the significance of investment in the development and re-imagining of the parameters of a fictional character of considerable antiquity. The IPKat notes how Disney has done much the same with regard to Mickey and Minnie Mouse, for example, to stimulate and maintain interest in each new generation of consumers. While the importance of this exercise is sometimes more apparent with regard to copyright law (see eg the relatively unappealing image of an early Mickey Mouse, right), it is clearly important when generating goodwill for trade mark and passing off purposes too.

Merpel is not hugely happy at the gap of nearly a year between the trial of most of the trade mark issues and the passing off claim and the January 2015 trial date for the copyright infringement claim and an outstanding trade mark invalidity counterclaim. She knows that it takes time to organise even an amended defence and that the claimant has to be able to examine and if necessary adjust its own responses; she also appreciates that we're not talking about a life-saving drug or vital component of an IT system, where there may be a huge public interest in pressing for a swift outcome -- but eleven months does seem a long time for the fate of a brand to be held in limbo.